Digital Coupons Bring in New Users, Transform Marketplace

BusinessNewsDaily Staff | April 19, 2011 12:25pm ET

Digital coupons are transforming the coupon marketplace, bringing in new users and gaining heavy redemption from prolific couponers in more traditional user groups such as large households, well-off families and Gen X parents, a new report concludes. But the bulk of the business remains in print for the foreseeable future.

The currently receding recession made consumers more budget-conscious, and overall coupon use has increased by 27 percent overall since the recession started in 2008. Print coupons still represent the majority of redemptions, with a 44 percent share of the market.

But in spite of being a work in progress, digital print-at-home coupons are more powerful than traditional print free-standing insert (FSI) coupons at getting consumers to try a product for the first time — but yield a lower return on investment (ROI) than their print counterparts.

Digital print-at-home coupons attract more new buyers by 35 percent, drive more incremental redemptions by 13 percents but have an 18 percent lower ROI than print FSIs, according to a study by research firm Knowledge Networks that leveraged loyalty card data from over 2 million shoppers.

Large households that fall in the top 10 percent for family size — known as "jumbo families" according to the 21 Acxiom PersonicX Life Stages the study was keyed to — are leading the move to digital coupons, representing 15.6 percent of all digital redeemers.

“Although the bulk of the coupon business is still paper, digital coupons are doing an excellent job of attracting more affluent, savvy consumers,” said Neal Heffernan of Knowledge Networks. “Digital print-at-home coupons yield a lower ROI due to their higher redemption rates and the historically low distribution costs for print FSI coupons, but digital coupons have established a foothold with some key consumers that every brand wants to be friends with — such as large families and high-income boomers.”